FTSE 100 heavyweight Shell suffered a sharp decline in earnings during the second quarter amid turbulent conditions for oil and gas prices.
The London-listed energy giant reported $4.26bn (£3.21bn), representing a 32 per cent drop from the second quarter of 2024, when the company secured $6.29bn, as reported by City AM.
However, Shell managed to edge above an LSEG-compiled analyst consensus of $3.87bn in projected earnings.
Shares surged more than three per cent as markets opened to 2,727.00.
The energy behemoth experienced a 30 per cent plunge in earnings within its gas division compared to the first quarter, driven by reduced prices.
European gas prices declined 18 per cent during the second quarter versus the opening three months of the year.
A ten per cent drop in oil prices also triggered a 26 per cent blow to Shell’s Upstream business, which concentrates on the exploration and extraction of oils and gas.
Earnings at the company’s chemicals and products division plummeted 74 per cent quarter-on-quarter.
Nevertheless, Shell unveiled a $3.5bn quarterly share buyback, marking its 15th consecutive quarter of at least $3bn in buybacks.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Shell’s second earnings hit a bit of an oil patch, with lower commodity prices, a weaker trading environment and unplanned downtime at its chemical plants all playing their part.”
Nathan said: “Shell’s balance sheet is one of its key strengths, and investors could start to get nervous if debt continues to rise for any length of time. Nonetheless, management has ploughed on with a further $3.5 billion buyback, the 15th consecutive quarter of stock repurchases of over $3 billion, and there are some signs that financial performance could improve in the third quarter.”
Oil woes
Shell has been buffeted by volatile oil pricing over recent months amid an unpredictable geopolitical landscape.
Prices tumbled to four-year lows in April with a barrel of Brent crude oil at $59.23 after President Donald Trump imposed sweeping tariffs across the US’ trading partners, triggering concerns of a global trade war.
However, the intensifying Middle East conflict drove prices surging more than nine per cent to as much as $81 – its sharpest rise in over three years – as Israel targeted Iran’s nuclear facilities in June.
Brent crude oil was hovering just above $70 on Thursday morning as London markets commenced trading.
Shell became the focus of takeover rumours earlier this year concerning a potential acquisition of its beleaguered domestic competitor BP, which has similarly suffered from the challenging oil climate.
However, the company has stated explicitly it had “no intention” of submitting a bid.
Shell outlined proposals in March to intensify its drive into liquified natural gas as it repositioned its strategy around “performance, discipline and simplification.”
